Seattle Gigabit Service Delayed Due to Funding Problems

Gigabit Squared’s plan to bring broadband Internet service to 12 neighborhoods in Seattle may be in jeopardy.

Mayor Mike McGinn told GeekWire earlier this week that Gigabit Squared is facing financing problems causing it to delay installation of the high-speed network. He questioned whether the project – now a year removed from its initial announcement – will ever get off the ground. Gigabit Squared was supposed to launch the network to two areas early next year.

When contacted by Government Technology for comment, Gigabit Squared spokesman Matt Weinland issued the following statement on behalf of the company's senior management:

“Gigabit Squared has completed several rounds of investment financing and is currently executing projects in Illinois and Florida with a combination of public and private funding. Gigabit Squared appreciates Mayor McGinn’s passion for, and support of, the [fiber-to-the-home] project in Seattle. We look forward to a dialogue regarding project possibilities with Mayor-elect Murray and his staff.”

News of the delay comes on the heels of McGinn’s hotly contested mayoral race that he lost to Sen. Ed Murray in November. Murray’s campaign was financed in part by Comcast, leading some to question whether Seattle’s partnership with Gigabit Squared would last once he takes office in January.

Murray expressed support for the project, but telecom pundits have wondered whether Murray’s comments were sincere. If Gigabit Squared can’t secure the funding to launch, it may not matter. But was Murray’s election and Comcast’s presence in the area enough to scare off potential backers? Experts weren’t sure.

Patrick Lucey, policy program associate with the Open Technology Institute of the New America Foundation, said there wasn’t enough information to determine whether Gigabit Squared’s fundraising efforts are tied to the mayoral election in Seattle. But he was curious whether Comcast was aggressively marketing speed increases or lowering prices in the announced Gigabit Squared areas of Seattle. If Comcast was doing that, it might indicate that the company was intentionally making it more difficult for people to sign-up for Gigabit Squared in the future.

An email to Steve Kipp, vice president of communications for Comcast’s West Division, asking for comment on the company's pricing practices wasn't immediately returned.

Christopher Mitchell, director of the Telecommunications as Commons Initiative with the Institute for Local Self-Reliance and a national expert on community broadband issues, said Gigabit Squared must have been having difficulty raising money long before anyone knew what Comcast was giving to Murray’s campaign. But he wasn’t surprised that Gigabit Squared was having problems.

“The reason we have so little competition in telecom is because big incumbent firms like Comcast have all the advantages,” Mitchell said. “When faced with competition, they temporarily lower prices to run the competitor out of the market. You can’t do that to Google, but you sure can try it against even a well-run, smart startup. Investors know this.”

In his interview with GeekWire, McGinn was critical of big cable providers such as Comcast, noting that they are not upgrading their systems to keep pace with global technology advances. He added that if he was continuing as mayor, he’d start looking to build a municipal fiber utility.

Lucey felt that option was one of many open to Seattle. But he cautioned that a community needs to back broadband as a key local priority and support it for a fiber utility or local government-owned high-speed network.

“There’s so much attention on increasing broadband speeds, especially the gigabit threshold,” Lucey said. “So I think there are a lot of models and ways to get there, and people are still trying to figure out what works best and we’ll see other attempts in the future.”

Mitchell believes that Seattle is going to have to invest much more in its own fiber and conduit if it wants a real competitor to challenge Comcast. He added that there’s a big risk in pumping public dollars into a private firm that could eventually be bought out by Comcast or simply agree to carve out the market with it.

“The best long-term bet would be for the city to continue expanding the network, either allowing another ISP or several to use it, or beginning to offer services directly,” Mitchell said. “This is a real challenge, but large cities have to face the reality of an incredibly important, very broken market. If there were an easy answer, everyone would be doing it."